NEW YORK, N.Y. – Liberty Media Corp. said Thursday that it is cutting its stake in Barnes & Noble Corp., sending the bookseller’s shares down sharply.

The investment company controlled by billionaire investor John Malone gave Barnes & Noble, the largest specialty bookstore chain, a life line in 2011 when it bought 12 million Barnes & Noble shares at $17 apiece. The shares represented a 17 per cent stake in the company.

But now Liberty says it is selling the majority of its shares to institutional buyers. It will keep 10 per cent of its original investment and lose its two board seats.

The change comes as Barnes & Noble has been trying to turn itself around as competition from discount stores and online retailers toughens, and as consumers shift away from traditional books to digital formats. The chain has invested heavily in its Nook unit, but that division has not been profitable.